A Good Start on the Biosimilar Front

The Affordable Care Act provided a route to approve biosimilars -- copycat versions of biologics -- but the Food and Drug Administration has only started to set up the approval system.

That didn't stop Teva Pharmaceuticals (NYS: TEVA) from gaining approval of its copycat version of Amgen's (NAS: AMGN) Neupogen, though. The generic-drug company got around the delay in setting up an approval system by applying for approval of tbo-filgrastim under the standard FDA Biologics License Application. For all intents and purposes, the FDA considers tbo-filgrastim a new drug approved based on the merits of its clinical trials.

That's not exactly what drugmakers interested in the biosimilar market are hoping to accomplish. Because it's a separate drug, tbo-filgrastim won't be substitutable for Neupogen. To prescribe the copycat version of the drug, the doctor will have to ask for it by name.

Generics of small-molecule drugs, where the approval pathway is clearly defined, can use the brand name's efficacy and safety data to gain approval. Because small changes in the manufacturing process can cause huge differences in a biologic product, the FDA is likely to require manufactures of biosimilars to have more extensive trials than simple bioequivalence trials required of small-molecule generics.

Teva won't launch tbo-filgrastim until November of next year because of a patent settlement with Amgen. Hopefully by then the FDA will have full plans in place to implement a process for approving biosimilars.

That, of course, assumes that the next Congress doesn't overturn the Affordable Care Act and take out the FDA's ability to approve biosimilars in the process. If you're looking to profit from the election, check out the Fool's new free report, "These Stocks Could Skyrocket After the 2012 Presidential Election," where you'll get ideas for companies that can benefit from each candidate's platform. Get your free copy by clicking here.